TAIPEI (Taiwan News) – The New York Times (NYT) reported on June 29 that China could still lose its decades-long status as the world’s factory even after the tentative trade cease-fire reached by U.S. President Donald Trump and his Chinese counterpart, Xi Jinping, on the sidelines of G20 summit in Osaka, Japan.
According to the report, China’s world factory status has been undergoing a shift since Trump imposed 25 percent tariffs on $50 billion worth of Chinese technology-related exports last summer, including the manufacture of car parts and components for nuclear reactors.
Trump then slapped 10 percent tariffs on US$200 billion worth of Chinese goods including chemicals, building materials, furniture, and some consumer electronics. This May, these were increased to 25 percent.
Amid the trade war between the world’s two largest economies, a slew of companies have been moving their supply chains out of China, the NYT reported. Some of them “have been shifting that final assembly to Vietnam, producing a surge in American imports from Vietnam this year,” the news outlet said.
The Osaka talks seem to be a short-term success for China as Trump agreed to postpone the threat of imposing new tariffs on roughly US$300 billion worth of Chinese goods a year to bring Beijing to the negotiating table. Trump also agreed to loosen restrictions on U.S. technologies available to Chinese telecom giant Huawei without offering specifics, the news outlet said.
However, nothing concrete has emerged from the most recent trade talks held between the two economic giants, and the U.S. could maintain broad tariffs on Chinese goods for months or perhaps years to come, the report said. Under these circumstances, global companies would most likely respond by continuing to pull their supply chains out of China.
The NYT quoted Jacques deLisle, director of the Center for the Study of Contemporary China at the University of Pennsylvania, as saying that as long as the threat exists, the risks inherent in depending on these long supply chains exist. “Businesses don’t like uncertainty, and this prolongs the uncertainty,” said deLisle.
